A Pocket PC 2002 PDA will do it.
I was just playing with my HP Jornada today, it plays 160x120 Windows Media files great and stutters a little with 320x240. Mine has a 200mhz StrongArm processor one of the newer ones with a 400mhz processor should play the 320x240 fine.
I would suggest you look at the new Dell Axim X5, the $299 model (has a $50 dollar mail in rebate now to make it <$250) model has a 400mhz processor plus compact flash and SD/MMC media slots to store your video clips. You can’t touch its features for at that price on any other PDA.
You might also want to take a look at the Archos Jukebox Multimedia 20, it has a 20 GB hard drive and is a MP3 player but it also has a small LCD screen on which you can play stored Divx/mpeg 4 files… It also has a video out connection that allows you to play back on TV. It will do 320x240 that is near VHS quality.
Dell
[url]http://www.dell.com/us/en/dhs/products/series_pda_snp.htm[/url]
Archos
[url]http://www.archos.com/lang=en/products/prw_500282.html?country=us[/url]